Google AdXhttp://www.adweek.com/taxonomy/term/11141/all
enGoogle Cracks Down on Marketers' Access to Data http://www.adweek.com/news/technology/google-cracks-down-marketers-access-data-160543
Garett Sloane<img src="http://www.adweek.com/files/imagecache/node-detail/news_article/unnamed_6.jpg"> <p>
Google is tightening its grip on advertising data, and some industry sources fear the policies could hamper their ability to market online.</p>
<p>
Just this week, Google began talking to ad technology partners about restrictions on how they gather data when running campaigns on the Google Display Network. Some sources said the timing was odd, coming on the heels of <a href="http://www.adweek.com/news/technology/facebooks-new-people-based-ad-technology-marketing-nirvana-160438" target="_blank">Facebook&#39;s launch of Atlas,</a> an ad server and data platform that many say is the biggest rival to Google&#39;s dominance. Still, other sources said Google is just reinforcing a data regime it has been working on for some time.</p>
<p>
In the conversations this week, with companies like Krux, BlueKai and Lotame, Google told data management platform players that they could not use pixels in certain ads. The pixels&mdash;embedded within digital ads&mdash;help marketers target and understand how many times a given user has seen their messages online.</p>
<p>
&quot;Google is only allowing data management platforms to fire pixels on creative assets that they&#39;re serving, on impressions they bought, through the Google Display Network,&quot; said Mike Moreau, chief solutions officer at Krux. &quot;So they&#39;re starting with a very narrow scope.&quot;</p>
<p>
These third-party data firms are still allowed to use pixels if they also execute the ad buys, acting as the demand-side platforms, but the problem is many marketers use multiple demand-side platforms to buy ads and only one data management platform, Moreau said.</p>
<p>
<strong>Impact on Ad Buyers Could Be Big</strong></p>
<p>
One of the potential impacts is that marketers won&#39;t be able to effectively track campaigns that run across the Web from Google to AOL to Yahoo&mdash;they might not be able to connect the dots and efficiently allocate marketing dollars, industry sources said. Marketers could wind up buying more impressions than they need from Google if they can&rsquo;t monitor the frequency of ads being served, Moreau said.</p>
<p>
He also said that the talks are ongoing and Google has been open to listening to the concerns of the data executives to get them the information they need.</p>
<p>
The wider fear, however, is that cracking down on pixels on the Google Display Network is just the start, and there could be a bigger effect on marketers if Google instituted similar policies throughout the DoubleClick Ad Exchange (AdX).</p>
<p>
&quot;Right now it&#39;s a relatively small percentage of marketers buying impressions through Google Display Network,&quot; Moreau said. &quot;If it expands to AdX, it starts to become really significant.&quot;</p>
<p>
Google&#39;s data policies are important because they effect how marketers choose to execute online campaigns, and any barriers to gathering data could encourage them to use more of Google&#39;s services where there is naturally less friction, sources said. Google, much like Facebook, could become a walled garden of data.</p>
<p>
Another data company exec said that Google could threaten the lifeline of their business.</p>
<p>
&quot;Google is generally trying to change the way we consume data,&quot; an industry source said, speaking on the condition of anonymity. &quot;It could cause issues for the third-party data market, which could no longer provide measurements for clients.&quot;</p>
<p>
Google said that talks with data partners this week did not signify changes in its policies. The outreach was about enforcing <a href="https://support.google.com/adwordspolicy/answer/94230?hl=en" target="_blank">current policies.</a></p>
<p>
&quot;We routinely run checks of our systems,&quot; Google said in a statement today. &quot;If partners aren&#39;t compliant with our current policies, we&#39;ll notify them and work with them to make any needed adjustments.&quot;</p>
<p>
<strong>Google Looks to Stop the Leakage</strong></p>
<p>
Google is taking steps to prevent data leakage, according to Adam Berke, CMO of AdRoll. Leakage happens when data firms operate in a gray area, collecting user information that Google considers proprietary.</p>
<p>
&quot;Even before this Facebook Atlas announcement, Google was starting a process of getting its house in order with respect to third parties and data collection on their display network,&quot; he said.</p>
<p>
Google&#39;s adjustments could be part of its broader strategy around identity technology, <a href="http://www.adweek.com/news/technology/google-s-latest-role-cookie-monster-153712" target="_blank">creating the next-generation data tools to enable cross-device marketing</a> to consumers jumping from phones to laptops to TV. This is the next frontier of digital advertising that both Facebook and Google are positioning themselves to dominate, considering they likely have the most lucrative data on the most mobile users.</p>
<p>
&quot;Google is moving forward with more interesting applications of identity, which it can&#39;t do if data leakage is a problem,&quot; Berke said.</p>
TechnologyadrollAdvertising WeekAdXAtlas SolutionsBlueKaicookiesDatadataDoubleclickdoubleclick ad exchangeFacebookFacebookGoogleGoogleGoogle AdXLotamethird-party cookiesFri, 03 Oct 2014 18:02:10 +0000160543 at http://www.adweek.comCondé Nast's Answer to Programmatic Buyinghttp://www.adweek.com/news/advertising-branding/cond-nasts-answer-programmatic-buying-147724
Lucia Moses<p>
Cond&eacute; Nast has introduced a new digital marketing product, one of its first since the company <a href="http://www.adweek.com/news/press/shake-cond-nast-corporate-sales-leads-layoffs-141823">overhauled its corporate sales group</a>&nbsp;last summer to tap into potential growth in online advertising.&nbsp;</p>
<p>
The new product, called Cond&eacute; Nast Catalyst: Audience by Design, is an attempt to match the company&rsquo;s audiences with brand advertisers to reach consumer types like high-spending moms and highly social singles who aren&rsquo;t expressly targeted by Cond&eacute; Nast&rsquo;s 27 sites.</p>
<p>
While audience segmentation by publishers isn&rsquo;t new, Cond&eacute; Nast says its segments are distinctive in their level of sophistication.&nbsp;Working with Adobe Audience Manager, the publisher plans to extract consumer behavior insights from its network of 450,000 &quot;preferred subscribers&quot; to better analyze its base of 55 million subscribers of titles like Vogue and GQ.</p>
<p>
The magazine giant, knowing advertisers may want to reach more such consumers around the Web, will also extend its reach by letting advertisers target users of non-Cond&eacute; sites found through Google Ad Exchange.&nbsp;</p>
<p>
&ldquo;We&rsquo;ve been sitting on a treasure trove of user data,&rdquo; said Lou Cona, chief marketing officer for Cond&eacute; Nast. &ldquo;We&rsquo;re taking data from the legacy business and leveraging it online. This is satisfying an advertiser need that we haven&rsquo;t been able to do in the past.&rdquo;</p>
<p>
Until recently, Cond&eacute; Nast had neither enough scale online nor the tools to do the deep analysis of its audience. That&rsquo;s changed, as have advertisers&rsquo; growing interest in big data. At the same time, publishers are facing downward pricing pressure on online advertising from programmatic buying systems. Thus, Cond&eacute; Nast sees its Catalyst program as addressing the limits of such systems by giving advertisers control over the audiences and environment. &ldquo;It helps them find audiences that are safe,&rdquo; said Josh Stinchcomb, vp of corporate partnerships.</p>
<p>
American Express, AT&amp;T and Nieman Marcus are among the program&rsquo;s first clients. Lou Paskalis, vp of global media, content development and mobile marketing for AmEx, said he was attracted to Catalyst&rsquo;s ability to find specific types of consumers across all Cond&eacute; Nast&rsquo;s properties.</p>
<p>
&ldquo;It allows us to work horizontally across their brands as opposed to just by content and context,&rdquo; Paskalis said. &quot;Any time we as an industry can serve more relevant advertisements, it&#39;s good for the consumer, the publishing community and the advertiser.&quot;</p>
<p>
&nbsp;</p>
Advertising & BrandingThe Pressad techAdobeConde NastGoogle AdXOnlineprogrammatic buyingMagazineWed, 06 Mar 2013 05:00:36 +0000147724 at http://www.adweek.comThe Bots Are Taking Overhttp://www.adweek.com/news/advertising-branding/bots-are-taking-over-147091
Mike Shields<p>
It&rsquo;s Solve Media&rsquo;s job to help make sure you&rsquo;re not a <a href="http://en.battlestarwiki.org/wiki/Cylons_(TOS)" target="_blank">cylon</a>. Or a <a href="http://en.wikipedia.org/wiki/Borg" target="_blank">Borg</a>, or a <a href="http://www.youtube.com/watch?v=mxD-5z_xHBU" target="_blank">Dalek</a>, or some kind of Web scraping robot. So when the company says that <a href="http://www.adweek.com/news/technology/rise-machines-web-144044" target="_blank">bot traffic</a> is on the rise, there might be reason for Web publishers, advertisers and e-commerce companies to worry.</p>
<p>
The company, which delivers text ads that take the place of those annoying <a href="http://www.captcha.net/" target="_blank">Captcha</a> security tools (where you have to type an illegible word to prove you&rsquo;re not a robot), has released its latest Bot Traffic Market Advisory. The numbers are troubling.</p>
<p>
According to <a href="http://www.adweek.com/news/advertising-branding/solve-media-brings-brand-washing-video-ads-138757" target="_blank">Solve</a>, the amount of &ldquo;suspicious activity&rdquo; on the websites it tracks jumped from 26 percent in Q3 2012 to 40 percent in Q4. At least a quarter of that suspicious activity is from bots, per Solve&rsquo;s data, which is pulled from the 6,000 or so publishers that employ its Type-In technology to prove their users are indeed human.</p>
<p>
What do these increases mean? One effect: Potentially more advertisers are paying to reach people that aren&rsquo;t truly people. According to Solve, bot traffic cost marketers between $1 billion and $2 billion in display advertising in Q4. That theoretically drives up ad rates and drives down the effectiveness of ad campaigns&mdash;while also leaving publishers vulnerable to fraud, content theft and spam.</p>
<p>
Naturally, Solve has reason to tout such data. The company claims its tools and products can help publishers against bot-driven traffic. But they&#39;re not the only ones talking up the robot scourge. Many publishers, advertisers and researchers including&nbsp;<a href="http://www.mediapost.com/publications/article/184100/bot-traffic-remains-drain-in-ad-industrys-pocket.html#axzz2K9ANUeuw" target="_blank">comScore</a> have <a href="http://doubleclickadvertisers.blogspot.com/2012/12/case-study-doubleclick-ad-exchange.html" target="_blank">warned</a> about a massive <a href="http://www.digiday.com/platforms/policing-bad-ads/" target="_blank">surge</a> in nonhuman traffic, particularly in the exchange space.</p>
Advertising & BrandingTechnologyDisplay advertisingGoogle AdXSolve MediaWed, 06 Feb 2013 20:00:02 +0000147091 at http://www.adweek.comAmazon, Advertising's Sleeping Giant, to Awaken in 2013http://www.adweek.com/news/technology/amazon-advertisings-sleeping-giant-awaken-2013-145964
Tim Peterson<img src="http://www.adweek.com/files/imagecache/node-detail/news_article/amazon-com-hed-2012.jpg"> <p>
Amazon made a splash during October&rsquo;s Advertising Week while&nbsp;<a href="http://adage.com/article/digital/amazon-breaks-silence-ad-ambitions-advertising-week-foray/237546/" target="_blank">previewing its advertising business</a>, but that was merely a ripple compared to the waves the e-commerce behemoth has coming for 2013 and beyond.</p>
<p>
Over the past year, Amazon has built a proprietary real-time bidding platform that plugs into exchanges and supply-side platforms, including Google&rsquo;s AdX and PubMatic. This platform lets the company retarget its users across the Web based on their browsing and purchase habits on Amazon&rsquo;s owned-and-operated properties.&nbsp;That could be a game changer. Given Amazon&#39;s recommendation engine and general deal-closing prowess, the company&#39;s data should have advertisers drooling.&nbsp;</p>
<p>
Darren Herman, chief digital media officer at The Media Kitchen, said he&rsquo;s bullish on Amazon&rsquo;s market opportunity. &ldquo;I think they could become one of the bigger media companies in the next five years or so. You have to realize that they&rsquo;re capturing a ton of demand through their owned-and-operated sites and have people shopping right now.&rdquo;</p>
<p>
Amazon slowly rolled out the platform in 2012, but as early as the first quarter of 2013 it will introduce a self-serve real-time bidding platform for media buyers, including agency trading desks, which will be able to use the platform to manage their own buys, according to multiple sources with knowledge of Amazon&rsquo;s plans.</p>
<p>
&ldquo;Amazon has a longstanding practice of not commenting on future plans, so we can&rsquo;t speak to a self-service platform,&rdquo; emailed an Amazon spokesperson.</p>
<p>
While Amazon has yet to demo the platform for agency buyers, according to trading desk executives with knowledge of Amazon&rsquo;s plans, the platform is expected to let buyers leverage Amazon&rsquo;s valuable data&mdash;to an extent. The self-serve RTB platform would hypothetically function similarly to Facebook&rsquo;s Ads Manager in terms of how buyers could target their ads. Sources said Amazon is extremely protective of its data and wary of providing outside access, so like Facebook, Amazon&#39;s platform would enable buyers to create targeting segments such as &ldquo;men; aged 25-34; in California; interested in high-definition TVs; who have purchased how-to books and home improvement tools.&rdquo; But Amazon is not about to hand over its customer&#39;s names or individual buying histories.</p>
<!--pagebreak-->
<p>
The self-serve platform would be a significant step for Amazon and its advertisers. Amazon has run ads on its owned-and-operated sites like IMDb.com for years, and more recently its Kindle devices, but those ads are sold more traditionally. That is, typically media buyers work with Amazon&rsquo;s sales reps to discuss the audience their advertiser is looking to to target, and they then negotiate a buy&mdash;like any other online ad deal. In those cases, buyers submit insertion orders, and Amazon executes the buy across its network and reports back results.</p>
<p>
Amazon also has the Amazon Advertising Platform, which it showed off during Advertising Week. That product has been in market &ldquo;for about two years,&rdquo; said the Amazon spokesperson. But sources said that until Amazon began building its own bidding technology last year, the company had partnered with ad tech firms <a href="http://allthingsd.com/20110628/amazon-starts-an-ad-network-powered-by-your-data/" target="_blank">including Triggit</a> to place ads. That&rsquo;s no longer the case. &ldquo;Amazon Advertising Platform is a fully-managed service, run through our own, proprietary technology. We don&rsquo;t currently work with DSPs,&rdquo; the spokesperson said.</p>
<p>
According to sources and confirmed by Amazon&rsquo;s spokesperson, that platform&rsquo;s media-buying process works much in the same way as advertising on Amazon&#39;s properties: lots of hand-holding and data-safeguarding, but in this case the ads run on non-Amazon sites.</p>
<p>
&ldquo;Amazon Advertising Platform leverages the same, pre-defined audience segments we offer for campaigns running on Amazon.com to show users more relevant ads&mdash;in much the same way Amazon has been recommending products to its retail customers for many years. These segments have a minimum size, and are based on anonymous, aggregate data,&rdquo; said the Amazon spokesperson. Sources said Amazon currently offers two types of targeting options. Lifestyle targeting crunches Amazon&rsquo;s data into product-related interest pools, such as those who view consumer electronics products; in-market target functions like traditional display retargeting programs.</p>
<p>
For example, Amazon might see a user check out Blu-ray players on its site, drop a cookie on that user&rsquo;s browser and then bid to run an ad for a Sony Blu-ray player when that cookie pops up on a site Amazon has access to through one of its inventory sources, such as PubMatic. The Amazon spokesperson said the platform&rsquo;s inventory &ldquo;comes from multiple sources&mdash;a mix of Amazon owned-and-operated properties (<a href="http://www.amazon.com" target="_blank">Amazon</a>, <a href="http://www.imdb.com" target="_blank">IMDb</a>, DPReview, etc.), ad exchanges and direct publisher relationships.&rdquo; According to data from Evidon&rsquo;s tag-tracking tool Ghostery, which measures the top domains delivering the AdChoices icon (a good indicator that RTB ads are being delivered), Amazon.com ranked 23rd globally during the week ending Dec. 10.</p>
<p>
Amazon has also been using the platform internally to promote products it sells with banners on sites it doesn&rsquo;t own that direct back to Amazon, sources said. In fact, last year Amazon used Turn&rsquo;s platform to run its ads but has shifted to its own platform this year, said insiders.</p>
<!--pagebreak-->
<p>
Ads served on Amazon&rsquo;s owned-and-operated sites have been sold on a cost-per-thousand-impressions basis, but agencies are said to be wary of Amazon switching them to a cost-per-acquisition model since the e-commerce company would then have more insight into which clicks resulted in purchases (potent data that often isn&#39;t shared with most publishers). Nonetheless, the idea of such closed-loop advertising has many media buyers excited.</p>
<p>
&ldquo;What&rsquo;s so powerful is having revenue data and action data on purchases,&rdquo; said Scott Symonds, managing director of AKQA Media. &ldquo;Google has [some ability to track conversions] through Google Analytics, but everyone is desperate to see [a closed-loop system].&rdquo;</p>
<p>
Said IgnitionOne CEO Will Margiloff: &ldquo;I&rsquo;ve always believed that the best data is conversion data. Who has more conversion data in e-commerce than Amazon?&rdquo;</p>
<p>
&ldquo;The truth is that they have a singular amount of data that nobody else can touch,&rdquo; said Jonathan Adams, iCrossing&rsquo;s U.S. media lead. &ldquo;Search behavior is not the same as conversion data. These guys have been watching you buy things for &hellip; years.&rdquo;</p>
<p>
Amazon is pulling at the low-hanging fruit of online advertising: retargeting, a market crowded with other retailers including <a href="http://adage.com/article/media/walmart-marketers-experience-platform/233364/" target="_blank">Walmart</a>, <a href="http://www.adweek.com/news/technology/retailers-ad-networks-144850" target="_blank">Best Buy</a> and <a href="http://www.adweek.com/news/technology/target-pushing-media-business-145769" target="_blank">Target</a> as well as pure-play retargeters like Criteo. The company had even been in deep acquisition talks with Criteo before Amazon began building out its bidder over the last year, sources said. Those talks dissolved after Criteo pegged its price higher than Amazon was willing to pay; one source estimated Criteo&rsquo;s current valuation to be around $1 billion.&nbsp;The Amazon spokesperson did not respond to a question on the acquisition talks with Criteo.</p>
<p>
But Amazon also has an opportunity to shift up the funnel, to go after demand-generation ad budgets (i.e. branding dollars) by using its audience data to package targeting segments. It&#39;s easy to imagine these segments as hybrids of Google&rsquo;s intent-based audience pools and Facebook&rsquo;s interest-based ones.</p>
<p>
Many media buyers agreed that Amazon has the potential to seismically shift the online advertising market, with Google, Amazon and Facebook replacing Yahoo, AOL and MSN as online advertising&rsquo;s holy trinity. That&#39;s if they even want in.</p>
<p>
Several sources, including buyers and ad tech executives, questioned how invested Amazon is in advertising. One trading desk executive who met with Amazon executives said the company&#39;s execs seemed most interested in how to beat Walmart, not Google. Another ad tech exec noted that Google has tens of thousands of employees focused on advertising. Sources ballparked the size of Amazon Media Group, which runs its ads business, in the range of 600 employees. The Amazon spokesperson declined to confirm the number of Amazon Media&rsquo;s Group employees.&nbsp;Amazon has staffed a respected team within the Amazon Media Group, with sources pointing to former MediaMath vp Mark Mannino and former NBCUniversal sales exec Ryan Mayward as key hires.</p>
<!--pagebreak-->
<p>
Should Amazon choose to compete on a level with Google and Facebook, it will have one clear advantage. The Amazon brand lends the company a trustworthiness among consumers not shared by lesser known entities like Criteo or even well-known companies like Google and Facebook, both of the latter two have had their hands slapped by the Federal Trade Commission over privacy violations.</p>
<p>
Amazon seems to recognize that advantage. Ads run through the RTB platform are expected to feature Amazon branding, as is currently often the case with Amazon Advertising Platform ads. Those ads are <a href="https://docs.google.com/viewer?a=v&amp;q=cache:SFJK_3kApP8J:https://images-na.ssl-images-amazon.com/images/G/01/AdvertisingSite/pdfs/AmazonBrandUsageGuidelines.pdf+&amp;hl=en&amp;gl=us&amp;pid=bl&amp;srcid=ADGEEShlkSO7QlJnXE55lemN9ehMKF2MTLceoMEkUwVRR_vIaC2Gfn3gC8uGAnFt7b717M0af4NdzFHLUEh-nGIyVd7sepE0WpX9i4wC-OBdZsN8AVz5yVI3-OBsit-uvoaQ5YU3zzbd&amp;sig=AHIEtbQ_POoYAt9mUtKlHupCWVDJQLVSWQ" target="_blank">advised</a>&nbsp;to display either the Amazon name or Amazon-approved calls to action, such as &ldquo;Shop Now at Amazon.com,&rdquo; though the Amazon spokesperson said Amazon Advertising Platform &ldquo;campaigns running off-Amazon are not required to include Amazon branding or link back to <a href="http://www.amazon.com" target="_blank">Amazon.com</a>.&rdquo; Affixing the Amazon brands to ads display outside of Amazon&rsquo;s sites could eliminate the creepiness factor often associated with retargeting (Amazon features the AdChoices icon on its ads and operates an <a href="http://www.amazon.com/gp/dra/info" target="_blank">ad preferences manager</a>, the spokesperson said). If someone was just checking out watches on Amazon.com or <em>The Wire</em>&rsquo;s page on IMDb.com, they&rsquo;re less likely to be startled when navigating to a blog about cats and seeing a Swatch or HBO ad featuring the Amazon logo.</p>
<p>
A challenge Amazon could face&mdash;though admittedly a stretch, even a long one&mdash;is explaining its off-Amazon ads business to people outside of the advertising industry. Ad-supported companies like Google, Facebook and Yahoo can justify their ad business as necessary for keeping the lights on; those companies apply user data to ad targeting because it bolsters their advertising revenues and therefore allows them to keep services free for consumers. Amazon doesn&rsquo;t have that luxury.</p>
<p>
Instead, Amazon has always been about commerce. The company <a href="http://sec.gov/Archives/edgar/data/1018724/000119312512436012/d403488d10q.htm" target="_blank">banked</a> $13.8 billion in Q3 revenue, with 84 percent of its sales being products (including shipping fees). Advertising fell into the &ldquo;other&rdquo; bucket alongside Amazon Web Services and co-branded credit cards, and the miscellaneous business segment altogether chipped in less than 5 percent of the period&rsquo;s revenue. Amazon&rsquo;s advertising business is &ldquo;quite literally gravy,&rdquo; said iCrossing&rsquo;s Adams. Though that doesn&rsquo;t mean Amazon couldn&rsquo;t explain how it exchanges value from advertising for consumers.</p>
<p>
&ldquo;The promise of ad-supported shopping continues to be Amazon&rsquo;s killer story,&rdquo; Adams said. &ldquo;Consumers always support ad-supported sales models with cheaper products than higher prices with no ads model.&rdquo;</p>
<p>
Throughout its history Amazon has <a href="http://www.eugenewei.com/blog/2012/11/28/amazon-and-margins" target="_blank">operated on low margins</a>. That lean strategy has let the company reduce prices to pressure competitors while inducing pressure from profit-hungry investors. Amazon&rsquo;s advertising business&mdash;provided it reached its potential atop the online advertising food chain&mdash;could subsidize the rest of the company to the point that competitors should get very nervous, especially because Amazon has yet to really roll out its weapon of mass disruption.</p>
<p>
The Amazon Web Services (AWS) cloud-computing platform is where things get really intriguing. The product has been in market since 2006; it powers the back-end technology for companies <a href="http://www.forbes.com/sites/anthonykosner/2012/06/30/amazon-cloud-goes-down-friday-night-taking-netflix-instagram-and-pinterest-with-it/" target="_blank">including</a> Netflix, Instagram, Pinterest and News International. Sources said Amazon&rsquo;s ties into media companies&rsquo; platforms could pave the way for Amazon to run ads alongside their content, with AWS functioning as an ad server without the need for Google&rsquo;s DoubleClick or 24/7 Real Media&rsquo;s Open AdStream ad servers. So theoretically, Amazon would have a delivery mechanism to any property with an Amazon tag.</p>
<p>
And as more TV viewing shifts to streaming on-demand content, Amazon is well positioned to become the content-and-advertising-distribution platform of choice, taking a cut of those companies&rsquo; ad revenue. That could explain why Netflix, which does not currently run ads on its platform, has <a href="http://www.pcworld.com/article/245226/netflix_opens_door_to_leaving_amazon_web_services.html" target="_blank">engineered its own technology</a> with the ability to pull away from AWS.</p>
<p>
But in the meantime, before it takes on the greater media world, Amazon has the Web-display market right in its sights. A giant sleeps no more.</p>
TechnologyAkqaAmazonCommerceCriteodataDisplay advertisinge-commerceFacebookGoogleGoogle AdXiCrossingIgnitionOneOnline advertisingOnline retailPubMaticretargetingThe Media KitchenTurnMon, 17 Dec 2012 11:00:02 +0000145964 at http://www.adweek.comIt's Basic Math That's Killing Displayhttp://www.adweek.com/news/advertising-branding/its-basic-math-thats-killing-display-145510
Jeremy Hlavacek<p>
<em>A few weeks ago, <a href="http://www.adweek.com/news/technology/ad-wreck-144994" target="_blank">Adweek ran an investigative feature</a> on the impact of the flux of venture capital dollars into the ad tech space. The piece generated a lot of reaction&mdash;mostly positive, though some readers did not agree with much of the piece.</em></p>
<p>
<em>One of the people Adweek interviewed for this piece, Jeremy Hlavacek, vp, strategy and business operations, Varick Media Management, believes that the massive explosion in display advertising supply is playing a much bigger role in driving down prices than the oversupply of ad tech middlemen is. He&rsquo;s even done some math to support this assessment.</em></p>
<p>
If you&rsquo;ve been paying attention to the RTB (Real Time Bidding) media space over the last few years, you have probably seen large and impressive numbers thrown around with abandon. Triple-digit growth rates! Billions of dollars in spend! Millions of dollars in venture capital! And perhaps as many as 10s of billions of impressions being sold on exchanges.</p>
<p>
It makes for great headlines, but what does this all mean? Has anyone stopped to think about these big numbers to get a better understanding of what is actually happening? Are we creating an &quot;ad wreck,&quot; or is this just the new digital reality?</p>
<p>
I don&rsquo;t claim to rival <a href="http://venturebeat.com/2012/11/07/nate-silver/" target="_blank">Nate Silver</a>, but as someone who has heard the big numbers repeatedly and can do some basic Excel work, I have a few thoughts. But first, the data &hellip;</p>
<p>
Let&rsquo;s start with total ad spending on RTB. There&rsquo;s no question that it&rsquo;s growing rapidly. The best estimates from <a href="http://www.forrester.com/home" target="_blank">Forrester Research</a> puts <a href="http://www.newmarketinginstitute.com/blog/forrester-rtb-in-its-sophomore-year/" target="_blank">RTB</a> spending at nearly $2 billion in 2012, up from 0 only a few years ago. Two billion may be a little on the high side for 2012, but there&rsquo;s no question that the growth is going to continue, so if it&rsquo;s not $2b annually today, it will be very soon.</p>
<p>
Second, the total display banner market. The annual number typically quoted here is about <a href="http://www.emarketer.com/newsroom/index.php/google-display-ad-leader" target="_blank">$8 billion</a>. This includes networks, RTB and direct sales. So by that measure, RTB is nearly 25 percent of the total display market already. One can&rsquo;t help but be impressed by the pace at which RTB is taking over display buying&mdash;and it&rsquo;s clear that the trend is not reversing.</p>
<p>
So where are those billions of dollars being spent? On exchanges, of course!</p>
<p>
The typical exchange volume you hear quoted from a leading demand-side platform (DSP) like Turn or Triggit is 10, 20 or even 30 billion impressions available per day. This includes the volume from big supply players like Yahoo&rsquo;s Right Media (RMX), Google&rsquo;s AdX, and other firms like AppNexus, Rubicon, Pubmatic, etc.&nbsp;</p>
<p>
And what about Facebook&#39;s new exchange, FBX? Most people in the space will tell you that FBX is &quot;multiple&quot; times the size of the largest RTB suppliers. So does that mean another 5, 10, 20 billion impressions? Hard to say for sure, but one thing is certain&mdash;you can safely add a few billion impressions to the pile and you probably won&rsquo;t be overstating matters.</p>
<p>
At the recent <a href="http://summit.appnexus.com/" target="_blank">AppNexus Summit</a>, executives from the company said that its platform handles 15 billion impressions, with another 7 billion coming through <a href="http://(http://www.adexchanger.com/online-advertising/taking-the-measure-of-appnexus-at-its-new-york-summit/" target="_blank">FBX</a>.&nbsp;</p>
<p>
OK, time for the math &hellip;</p>
<p>
Pick a number for supply. 10 billion? 20 billion? 30? More? Let&rsquo;s go with 20 billion for now; it&rsquo;s in the middle of the range and is close to the current AppNexus Summit quote.</p>
<p>
Assume for a second that 100 percent of that supply gets sold at a CPM of $1. I know that 100 percent sell-through is unrealistic and a $1 CPM may not be ideal, but bear with me as it makes the math easier. With those assumptions, $20m would be spent on exchanges daily. Using my handy Excel sheet, that would mean about $7.3b spent annually on RTB media.</p>
<p>
But wait a second &hellip; didn&rsquo;t we say that maybe $2b was spent on RTB in 2012? And the total display market is $8b?</p>
<p>
OK, we better revise. Let&rsquo;s assume that only 50 percent of inventory on exchanges gets bought for an average CPM of $1. That would mean $3.65b in total RTB spend. That&rsquo;s closer, but still off by about $1.65b or a little more than the market cap of The New York Times Co. ($1.2 billion), but what&rsquo;s a few billion among friends?</p>
<p>
So let&rsquo;s revise the CPM in our little thought experiment to $.50. That would bring the total RTB spend to $1.83 billion, which would fall a lot closer to market estimates.</p>
<p>
What can we conclude? If you assume that the data above is reasonably accurate, then one conclusion could be that there is a real imbalance in supply and demand of digital display and that RTB is exacerbating an already challenging issue for digital publishers. Another could be that publishers and tech partners are working with too many partners and creating lots of duplication, which leads to the question of, how is RTB bringing buying efficiency to the market? Or maybe a conclusion is that there is a lot of &quot;junk&quot; supply out there that needs to be purged by a viewability standard?</p>
<p>
I&rsquo;m not sure what the right conclusion is, but I think this &quot;math problem&quot; is a driver behind a lot of the issues in the digital display market today.</p>
<p>
The fact remains that newer, better technology is going to continue to automate digital media buying. The technology is needed because the Internet is an immense, fragmented media ecosystem where changes happen very quickly&mdash;in &quot;real time,&quot; if you will&mdash;and both buyers and sellers will continue to seek more performance and look to tech companies for help.</p>
<p>
I believe all of these changes are a good thing in the end, but at this specific moment in ad tech history, the industry has to look at supply and demand dynamics and give some thought as to what the desired outcome is.<br />
&nbsp;</p>
Advertising & BrandingTechnologyAppNexusFacebookFBXForrester ResearchGoogle AdXPubMaticright mediaRTBRubicon ProjectTriggitTurnVarick Media ManagementYahooThu, 29 Nov 2012 22:13:24 +0000145510 at http://www.adweek.comAd Wreck http://www.adweek.com/news/technology/ad-wreck-144994
Mike Shields<img src="http://www.adweek.com/files/imagecache/node-detail/news_article/fea-adwreck-hed-2012.jpg"> <p>
Blame Mary Meeker. Definitely blame Google. And most of all, perhaps, blame <a href="http://www.myspace.com" target="_blank">MySpace</a>.</p>
<p>
Whoever&rsquo;s fault it was, somewhere around the mid-2000s many people got the idea there was an enormous gap between time spent and dollars spent on the Internet&mdash;and that gap needed to get filled in somehow. They likely got the idea from Meeker, a well-known venture capitalist in Silicon Valley known for her much-anticipated <a href="http://www.businessinsider.com/mary-meekers-latest-incredibly-insightful-presentation-about-the-state-of-the-web-2012-5?op=1" target="_blank">Internet Trends</a> presentation each year. Then Google set the expectation that ad-supported Internet businesses can have hockey-stick growth. And thanks to MySpace, the idea emerged that every single page view rendered can and should have an ad&mdash;or lots of ads&mdash;attached to it.</p>
<p>
Given those conditions, the venture capital community couldn&rsquo;t help itself. The ad tech gold rush was on, unleashing a wave of ambitious promises. You could buy real people not websites, the argument went. You could optimize everything. Exchanges would make the Web just like Wall Street. Machines would buy your ads in real time with absolutely zero waste. Just write &ldquo;algorithm&rdquo; in your business plan, come up with a three-letter acronym, and millions will follow.</p>
<p>
Meanwhile, look where the online ad industry finds itself today. Trade organizations and industry leaders are practically crying out for brands to reconsider the Web. (&ldquo;Where are all my TV dollars?&rdquo;) Giants like <a href="http://www.facebook.com" target="_blank">Facebook</a> and Google decry the click as the industry&rsquo;s original sin. (&ldquo;We need to think like TV!&rdquo;) Meanwhile, the money keeps flowing in. The infamous <a href="http://www.lumapartners.com/lumascapes/display-ad-tech-lumascape/" target="_blank">Luma Partners</a> PowerPoint slide, which tracks the glut of ad tech firms, can barely fit all the company logos.</p>
<p>
Yet most brand advertisers continue to sit on the sidelines, not to mention premium publishers who are more than a little disappointed in this mess&mdash;a confusing, overloaded mess, in the estimation of many in the digital world.</p>
<p>
It sounds counterintuitive that loads of cash threatens to harm an industry, but a growing chorus complains that VC dollars have, in fact, done more harm than good to online advertising. Consider the numbers. According to the <a href="http://www.iab.net/media/file/IAB_Internet_Advertising_Revenue_Report_HY_2012.pdf" target="_blank">Interactive Advertising Bureau</a>, 67 percent of online spending during the first half of this year went to performance ads as opposed to branding ads, up from 65 percent in 2011 and 62 percent in 2012. Clearly, direct response dominates.</p>
<p>
Then there is the issue of real-time bidding, which has enabled audience-based buying to take hold. The result is a massive 40 percent pricing contraction over the last year, according to Mark Zgutowicz, senior research analyst at Piper Jaffray. Speaking at an <a href="http://www.youtube.com/watch?v=AUhv6b3Yyng" target="_blank">online marketing conference last month</a>, Jaffray said that premium CPMs had slipped from an average of $7 or $8 to $4 or $5. Not only has there been 100 percent growth in supply, he pointed out, but also the net effect of RTB has been lower prices. Jaffray predicts that next year, CPMs will decline just 10 to 15 percent.</p>
<p>
One would be hard-pressed to find the premium Web publisher getting rich from ad tech. But what about the advertisers and their agencies that have the upper hand in all this? &ldquo;I&rsquo;ve been arguing for some time that fragmentation or disruption is not good for this industry,&rdquo; says Will Margiloff, CEO at IgnitionOne. &ldquo;Marketers want simple; they don&rsquo;t want more layers. And there is more money going into this space than there is in the actual space.&rdquo;</p>
<p>
&ldquo;All this investment is predicated toward the lower funnel,&rdquo; adds Adam Kleinberg, CEO of Traction. &ldquo;It just feeds into this perception that it&rsquo;s not for brands. Very few companies are adding value to the space. They are offering just different flavors of very similar solutions. The &lsquo;Lumascape&rsquo; has become a meme because it is nonsense.&rdquo;</p>
<p>
Mike Cassidy, CEO of Undertone Networks, says, &ldquo;If you ask a marketer, click-throughs are lower than they&rsquo;ve ever been. All this audience targeting, retargeting, etc., maybe makes things a little better, but overall it&rsquo;s been pretty, pretty miserable.&rdquo;</p>
<p>
Even investors are crying foul. &ldquo;CPM-based advertising is broken,&rdquo; says Daniel Klaus, CEO of K2 Media Labs. &ldquo;There has been so much money wasted, and it continues to be wasted in this space. When it comes to ad tech, there are very few signs that it is really working.&rdquo;</p>
<!--pagebreak-->
<p>
Tolman Geffs, co-president of media investment banking firm JEGI, is even less forgiving in his assessment of the multitude of SSPs, DSPs, DMPs (supply-side platforms, demand-side platforms, data-management platforms), attribution firms and targeting companies: &ldquo;These companies don&rsquo;t make any money, and as a whole the industry doesn&rsquo;t make money. You have to ask, &lsquo;Why isn&rsquo;t this industry running on its own fuel?&rsquo; I tell my kids, just because you can do something doesn&rsquo;t mean you should. VCs are funding these companies, and the jury&rsquo;s out if their products even work.&rdquo; To test that out, Geffs recently checked his own profile using a product of one of the top Web ad-targeting companies and found himself listed as a 20- to 29-year-old woman. (For the record, he isn&rsquo;t.)</p>
<p>
The bigger problem, Geffs argues, is that most of the companies in the ad tech space are valued like software companies, which can be licensed to multiple businesses and quickly scale. Rather, most ad tech firms operate like marketing services firms, which require bodies and manual labor.</p>
<p>
As one VC describes the landscape: &ldquo;One company is making 20 million and losing 10. Another is making 40 and losing 15, another making 80, losing 20. The list goes on and on. They are not profitable unless they drive an enormous number of transactions. But that only works for the biggest companies with economies of scale&mdash;like, say, Google. But these companies get valued on dollars handled, not revenue.&rdquo;</p>
<p>
Ralph Terkowitz, general partner at ABS Capital Partners, says Web publishers should ask themselves: &ldquo;Can you make me some new money, or are you just a new tax?&rdquo; In too many cases, publishers feel shaken-down rather than enhanced. &ldquo;If I&rsquo;m a publisher, I have to be less than impressed with the value created,&rdquo; says Troy McConnell, AudienceFuel CEO.</p>
<p>
One veteran investor admits, &ldquo;When we were raising money in ad tech, I knew we were making it worse for publishers.&rdquo;</p>
<p>
And it&rsquo;s not getting any better. &ldquo;With all the non-working media costs, $1 earned can easily become $3 in costs,&rdquo; says Joe Apprendi, CEO of Collective. As Doug Weaver of digital sales consultancy Upstream puts it, &ldquo;The page view/ad impression economy is in full retreat, if not freefall.&rdquo;</p>
<p>
For an explanation of how, exactly, that happened, consider SSPs. Most major Web publishers have tested SSPs, which promise to improve their secondary ad sales, and many have been dissatisfied. &ldquo;We kind of invented the SSP,&rdquo; says AppNexus CEO Brian O&rsquo;Kelley, who co-founded Right Media in 2003. &ldquo;It had a lot of unintended consequences.&rdquo;</p>
<p>
According to a recent Forrester study examining the impact on pricing for publishers employing the SSP PubMatic, those publishers&rsquo; CPMs climbed from 60 cents to 81 cents. While 35 percent growth would seem impressive, the fact is that for most struggling Web publishers, it&rsquo;s hardly reason for a parade, particularly considering that most vendors in the space take cuts of 15 percent.</p>
<p>
&ldquo;You see these companies making money off of other people&rsquo;s value,&rdquo; says Mike Leo, CEO of Operative. By his estimates, $561 million has been pumped into SSPs and ad networks alone, with just $93 million being invested in creative services. Little wonder, then, that DR rules.</p>
<p>
Publishers are reluctant to talk about their ad tech experiences on the record, but many privately describe having dramatically cut their lists of third-party partners. As New York Times Co. CFO James Follo said during an earnings call a few weeks ago, &ldquo;Standard Web-based digital display advertising has been experiencing challenges, including a glut of available ad inventory and the resulting downward price pressure, as well as a shift toward ad exchanges, real-time bidding and all the programmatic buying channels that allow advertisers to buy audiences at scale, including through platforms owned or operated by Google and Yahoo.&rdquo;</p>
<p>
Churn is rampant among publishers using tech vendors like Rubicon, Quantcast and others (update: Quantcast claims its churn rate is less than 1 percent). &ldquo;We use them, but not much,&rdquo; says Jim Spanfeller, CEO of Spanfeller Media Group. &ldquo;We test them all against one another,&rdquo; adds Mike Fogarty, svp, global group publisher of BabyCenter. &ldquo;We&rsquo;ve tried Rubicon, PubMatic, Admeld&mdash;they didn&rsquo;t make us a dime more,&rdquo; Fogarty says. &ldquo;We&rsquo;ve been hard-pressed to find a third party that can bring me more value than working directly with brands.&rdquo;</p>
<p>
<a href="http://www.babycenter.com" target="_blank">BabyCenter</a> may be unique in that the site isn&rsquo;t swimming in inventory like, say, a portal would be. In many cases, 50-cent CPMs may be better than nothing. But that certainly wasn&rsquo;t the idea when all these companies arrived on the scene.&nbsp; When it launched, the SSP The Rubicon Project (with $42 million in funding) published a manifesto heralding a revolution. &ldquo;If we can return the power to the publishers, content will flourish,&rdquo; it proclaimed.</p>
<p>
Rubicon&rsquo;s founder and CEO Frank Addante defends his company&rsquo;s impact, arguing that most sites have been able to hold their pricing levels during a period in which supply was ballooning. &ldquo;We&rsquo;ve seen this industry head toward becoming a $50 billion ad market in part because of ad tech,&rdquo; he contends.</p>
<p>
These days, Rubicon likens itself to Sabre, the transactional software employed by the airline industry. Its focus is efficiency, not yield improvement&mdash;which hardly feels revolutionary. But at the same time, Rubicon boasts that its &ldquo;network&rdquo; is larger than Google&mdash;even though Rubicon is not a network.</p>
<p>
Many ad tech companies do the business-model shuffle. Data exchanges like BlueKai ($35 million in funding), once believed to be revenue rocket ships, have morphed into data-management platforms, adding to what IAB CEO Randall Rothenberg has coined the industry&rsquo;s &ldquo;technical gobbledygook.&rdquo;</p>
<p>
DSPs buy up DSPs, then disavow being DSPs. What does this morphing do? For one thing, it breeds much distrust. When a company like Quantcast (over $50 million in funding) arrives on the scene, touting itself as a better comScore, it suddenly becomes an ad sales player itself, and many publishers feel double-crossed. &ldquo;Obviously we&rsquo;re not doing a good enough job communicating what we are,&rdquo; admits Quantcast&rsquo;s CEO Konrad Feldman. &ldquo;We are an ad measurement company and an ad seller.&rdquo;</p>
<!--pagebreak-->
<p>
Regardless, there&rsquo;s been a backlash against the promise of online targeting, which boasts of scientific precision and perfect lookalikes. Andy Atherton, svp, strategic accounts, AppNexus (and co-founder of the former branding-oriented network Brand.net) argued that a slew of advanced targeting firms have become experts at packaging solutions that don&rsquo;t actually address real problems. But busy 24-year-old media planners are susceptible to their simplicity. He used the example of an ad tech firm promising a peanut butter advertiser the ability to reach millions of customers who only use peanut butter for recipes, rather than sandwiches. This projection, according to Atherton, was based on a very small data sample. &ldquo;Why not just target women?&rdquo; Atherton asked. &ldquo;This is all about a tech push rather than a customer pull.&rdquo;</p>
<p>
It seems nowhere is the disappointment and distrust more acute that in the ad exchange space. According to Piper Jaffrey, 70 to 80 percent of ads sold in exchanges such as Google&rsquo;s AdEx are not even viewable because they are delivered below the fold, meaning they don&rsquo;t actually appear on a user&rsquo;s screen. (Some claim the figure is closer to 90 percent). Then, comScore recently reported that non-human traffic on the Web jumped from 6 percent to 36 percent this year. Surely the bots have found a way to exploit the ad exchanges. According to buyers, companies such as AlphaBird create bogus content sites like Financialnewsstories.com, or other fraudsters build sites like Womenshealthbase.com, then flood the SSPs and exchanges with millions of robot-generated impressions over short bursts of time. Yet neither the exchanges nor VC-backed verification companies like DoubleVerify ($46.5 million in funding), are able to detect the bogus activity.</p>
<p>
Google, which labels its exchange as &ldquo;premium,&rdquo; has introduced its own verification tools. The company has also become very active in pushing the viewable impression cause, working closely with groups like the Association of National Advertisers the IAB and the American Association of Advertising Agencies the Making Measurement Make Sense initiative) to promote a new Active View standard&mdash;all part of the industry&rsquo;s Making Measurement Make Sense initiative.</p>
<p>
Says a Google spokesperson: &ldquo;We&#39;ve been fighting this fight since we acquired DoubleClick in 2007 and have invested a significant amount of time and money to do so. The truth is that the exchange industry has made huge leaps forward over the past couple of years both in terms of what is possible and how well it performs for buyers and sellers. It works as a model, this is why we&#39;ve seen the huge shift --both by publishers and marketers -- towards programmatic buying. Through our platforms alone, the DoubleClick Ad Exchange and DoubleClick Bid Manager (formerly Invite Media), we&#39;ve seen the number of impressions double over the past year.&quot;</p>
<p>
Then there&rsquo;s the recent dustup over Sambreel, a malware company that sneaks software onto user&rsquo;s desktops, then places ads from the likes of Ashley&rsquo;s Furniture and American Express on unwitting sites like NYtimes.com and YouTube. Sambreel maintains over 20 corporate identities on the Web, including Blankbase and mySuperCheap, blasting 50 to 100 billion impressions into the ecosystem via ad tech firms PubMatic and Rubicon Project&mdash;as well as via Google&rsquo;s own Invite Media platform (indirectly, as Invite doesn&#39;t work directly with publishers). Both Rubicon and PubMatic have cut Sambreel off, but only after buyers cried foul. What&rsquo;s to stop this from happening on the exchanges? Well, according to a case study conducted with the firm Media6Degrees, Google has a handle on such issues. &ldquo;Google actually has a very clean exchange,&rdquo; says Andrew Pancer, COO, Media6Degrees. &quot;But buyers need to be extremely diligent in the space.&rdquo;</p>
<p>
Sure, but the upshot is that all the ad tech safeguards in the world seem to be falling short.&nbsp;&ldquo;This [incident with Sambreel] was obviously not a healthy thing for the ecosystem,&rdquo; admits PubMatic&rsquo;s CEO Rajeev Goel. &ldquo;But we think this was a small, isolated thing. We only work with premium publishers.&rdquo;</p>
<p>
Not everyone would characterize the problem as small or isolated. &ldquo;Digital marketing is really ripe with fraud, bad actors and other sorts of pestilence,&rdquo; says Digilant CEO Ed Montes. &ldquo;Big brands know this, as do publishers, and that is why the money isn&rsquo;t matching the time spent on the medium. What happens if ad supported models can&rsquo;t sustain real content producers?&rdquo;</p>
<p>
Naturally, others disagree with this point of view, and about the value of ad tech. Says Luma partners CEO Terence Kawaja, &ldquo;Brand dollars might not be coming, but instead of aiming for that billion-dollar branding market, publishers can and should focus on the trillion-dollar commerce opportunity.&rdquo;</p>
<p>
Others think publishers should stop decrying ad tech and start embracing it. Mark Westlake, CEO of TechMediaNetwork, urged publishers to see exchanges as testing grounds.</p>
<p>
&ldquo;Publishers have to be more clever,&rdquo; says David Kenny, CEO of The Weather Co., who points to a recent campaign for the retailer Burberry that delivered ads based on current weather conditions.</p>
<p>
&ldquo;There will be winners and losers in this space,&rdquo; adds Ned Brody, CEO of AOL&rsquo;s Advertising.com. &ldquo;But we absolutely have publishers in our company where the yield is going up from RTB.&rdquo;</p>
<p>
Vivek Shah, CEO of Ziff Davis, tends to agree with that Darwinian take. &ldquo;This is an incredibly liquid market,&rdquo; he says. &ldquo;And not all content has marketing value.&rdquo;</p>
<p>
The fact is, some publishers are becoming more open to ad tech. For example, The Wall Street Journal Digital Network just launched a private exchange with Rubicon. &ldquo;We&rsquo;re dipping our toe,&rdquo; says the Journal&rsquo;s digital sales head Mark Fishkin. &ldquo;More and more impressions are being sold this way, and we&rsquo;re getting business form accounts that normally wouldn&rsquo;t&rsquo; give us a look.&rdquo;</p>
<p>
And naturally, there are VCs who defend the investment wave, arguing that this is how it works: You make a lot of bets, and a few hit. Others pivot or perish.</p>
<p>
&ldquo;VC has a history of flooding areas that have value with a lot of money,&rdquo; says Joe Medved, partner at Softbank Capital. &ldquo;But if we didn&rsquo;t see businesses growing, if brands didn&rsquo;t see value, we wouldn&rsquo;t see that in ad tech.&rdquo; Medvev expects still more investment, as video and particularly mobile heat up.</p>
<p>
Moving forward, one can expect the industry to continue to rally around the idea of selling only viewable impressions. Many believe that will reduce supply and make it tougher on all the cheaters. &ldquo;If the market responds as it should and buys fewer shitty banners, publishers will get pressure from buyers to create more ad spaces that get seen for longer,&rdquo; says Greg March, media director at Wieden + Kennedy. &ldquo;Hopefully some will.&rdquo;</p>
<p>
What happens to the growing crop of ad tech firms? &ldquo;The investment we saw in ad technology was critical over the last five years,&rdquo; says Eric Picard, CEO of Rare Crowds. &ldquo;But the pace was too fast, dumping massive amounts of money into too many companies in the space over too short of a timeframe. So we&rsquo;ll see significant consolidation over the next few years of lookalike investments, probably not at great investor returns.&rdquo;</p>
<p>
Jeremy Hlavacek , vp, strategy and business operations at Varick Media Management, concurs: &ldquo;A lot of familiar names are going to reappear in this environment to make buys. Think Google, Yahoo, Microsoft and AOL.&rdquo;</p>
<p>
When the dust settles, one player looks to be the big winner in all this&mdash;the one company to which everybody in Web publishing balks at giving still more power. The VC-funded ad tech space will have been essentially free R&amp;D for Google.</p>
<p>
As Spanfeller sees it, &ldquo;They probably win in the end.&rdquo;&nbsp;</p>
TechnologyABS Capital Partnersad techAdMeldAlphaBIrdAolAppNexusBabyCenterBlueKaiCollectiveDataDigilantDoubleclickDoubleVerifyGoogleGoogle AdXIgnitionOneInteractive Advertising BureauK2 Media LabsLuma PartnersMagazine ContentMicrosoftNew York TimesOperativePiper JaffrayPubMaticQuantcastRare CrowdsRubicon ProjectSoftbankUndertone NetworksUpstreamVarick Media ManagementWieden + KennedyYahooTue, 06 Nov 2012 05:00:02 +0000144994 at http://www.adweek.comFacebook's Dynamic Creative Ads Lead to More Clickshttp://www.adweek.com/news/technology/facebooks-dynamic-creative-ads-lead-more-clicks-144319
Tim Peterson<p>
This past summer, Facebook <a href="http://www.adweek.com/news/technology/facebook-let-brands-target-ads-based-non-facebook-browsing-141114" target="_blank">began</a> letting advertisers retarget its users based on their off-Facebook browsing behavior through Facebook Exchange (FBX). Early results released last month <a href="http://www.adweek.com/news/technology/buyers-bullish-facebook-exchange-143658" target="_blank">were encouraging</a>, with multiple partners claiming that FBX ads outperformed retargeting campaigns run on other exchanges.</p>
<p>
But for FBX&rsquo;s first couple of test months, companies had to queue up relatively generic ads. Macy&rsquo;s could run an ad targeting a user that had visited its site in the past, but the retailer couldn&rsquo;t make sure the ad featured a particular dress that user had just looked at&mdash;until recently.</p>
<p>
On August 20, Facebook began testing with a number of FBX partners the ability to use their own dynamic creative products on the exchange. The performance of those even more tailored ads best the already outperforming standard FBX ads, according to AdRoll and TellApart, two of the first companies to run dynamic creative through FBX. <a href="www.adweek.com/news/technology/criteo-nabs-nearly-40-million-funding-round-143984">Retargeting firm Criteo</a> said late last month that it planned to roll out the capability by the end of the year.</p>
<p>
AdRoll has more than 100 advertisers running static campaigns on FBX. Five to 10 of them are using AdRoll&#39;s <a href="http://www.adroll.com/facebook_exchange" target="_blank">Liquid Ads product</a>, which retargets users with ads featuring either the product a user had viewed on an advertiser&rsquo;s site or relevant products &agrave; la Amazon&rsquo;s product recommendation tool.</p>
<p>
&ldquo;It&rsquo;s basically a personalized ad solution so that instead of our advertisers having to present the same creative, they can automatically and very efficiently change creative on an individual user level,&rdquo; said AdRoll president Adam Berke.</p>
<p>
Starting last month, AdRoll has been trialing dynamic creative with a handful of clients and alternating the dynamic creative equally with static ads. Since then, AdRoll has seen, on average, a 102 percent higher clickthrough rate (CTR) than the static ads, said Berke. Since FBX ads are bought on a cost-per-thousand-impressions basis, the dynamic ads cut advertisers&rsquo; cost per click in half, he said.</p>
<p>
&ldquo;The doubling of the clickthrough is more than we even saw [using Liquid Ads] in standard display,&rdquo; Berke said. Part of that can be attributed to picking off low-hanging fruit. Facebook&rsquo;s seemingly endless inventory&mdash;the site served <a href="http://www.bloomberg.com/news/2012-01-30/facebook-builds-its-lead-in-display-advertising-comscore-says.html" target="_blank">28 percent of total U.S. impressions last year</a>&mdash;raises the risk of serving users the same ads over and over again. However, dynamic ads keep things fresh by constantly cycling in new creative, he said.</p>
<p>
TellApart seems to have proven Berke&rsquo;s hypothesis true. Normally companies calculate clickthrough rates on a per-impression basis, or, how many clicks an ad received per number of times it was served. But those ads could conceivably (though not likely) be served to the same user. Instead, TellApart&mdash;which has transitioned all of its 30-plus clients on FBX to dynamic creative&mdash;measures user clickthrough rate, or how many users to whom ads are served chose to click. By that measurement, the company has seen a 6.65 percent user CTR for its dynamic ads run through FBX, which beats the 6.41 percent those ads see on Google&rsquo;s AdX exchange.</p>
<p>
TellApart&rsquo;s technology doesn&rsquo;t just deem which product a retargeted ad should feature. The company also calculates a <a href="http://tellapart.com/tellapart-platform/tellapart-data-platform" target="_blank">Customer Quality Score</a>. That measure is calculated from roughly 300 data signals&mdash;such as how a user navigated to a page, whether they&rsquo;ve been to a site before, time of day, and the country they&rsquo;re coming from&mdash;&quot;to target ads as well as determine which users would purchase the advertised product at face value and which should receive a special offer, such as free shipping or a discount code. When running these dynamic offers through FBX, TellApart&rsquo;s advertisers see on average a 40 percent higher conversion rates.</p>
<p>
&ldquo;On Facebook now, you have the chance to do one-to-one marketing, not just on the products [shown] but any offers associated with the products,&rdquo; said TellApart cofounder and CEO Josh McFarland, who claimed his company was the first to run dynamic creative on FBX.</p>
<p>
What McFarland calls one-to-one marketing, others could consider discriminatory. To McFarland, it&#39;s giving higher-value users different offers. &ldquo;I think when it comes to rewarding loyalty and customer quality, most people are understanding of the fact that an offer can be something not everybody is able to get,&rdquo; McFarland said.</p>
TechnologyadrollCriteoDisplay advertisingFacebookFacebookFacebook ExchangeGoogleGoogle AdXTellApartTue, 09 Oct 2012 17:00:05 +0000144319 at http://www.adweek.com